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Cindy Sui

The unemployment rate has reached 5.8 per cent with the number of jobless swelling to more than 200,000.

 In the three months to December, the jobless rate reached a 23-year high, jumping 0.3 percentage points from the rate recorded for the three months to November.

 The number of jobless rose to 201,000 people, the highest ever, and an increase of 8,600 in a month.

 Hardest hit were the construction, manufacturing, import/export and consumption-related sectors.

 The rate in the other major industries remained relatively stable.

 Officials said sackings at Lunar New Year, an expected increase in bankruptcies and a slowdown in the United States and European economies would push the jobless rate up higher.

 'In the third quarter of last year, we already saw quite a significant slowdown in exports, due mainly to the slowdown in the US market,' said government economist Tang Kwong-yiu.

 The Bank of East Asia yesterday forecast that inflation would drop to minus one per cent this year amid falling levels of private consumption.

 In its January economic analysis, it said fears of wage cuts were affecting consumer-spending levels.

 Economists predict the jobless rate will peak at six to seven per cent this year with some expecting it to reach eight per cent.

 The chief economist at ABN Amro, Eddie Wong, said the next three months would be crucial for the workforce.

 Another big round of lay-offs was expected around the Lunar New Year, when companies traditionally reviewed staffing and budgets.

 Secretary for Education and Manpower Joseph Wong Wing-ping urged the jobless not to lose hope.

 'There are still jobs out there,' he said, adding that positive signs in the economy, such as a stabilising property market and reduced interest rates should have a positive effect.

 The Government was also staying on track with its plan to create more than 100,000 jobs through infrastructure projects and school construction, Mr Wong said.

 He said the Labour Department had helped about 3,000 people find jobs each month.

 But the number of job seekers registering with the department has been five times more than that - at an average of 16,129 a month.

 Unionist legislator Lau Chin-shek said: 'I ask Tung [Chee-hwa]: if you're out of work for three months, then four months and then six months, I want to see if you lose hope [of getting a job].'  Underemployment was stable at 2.9 per cent.



Jobless rate hits 5.8pc with further rise forecast